US gold sales unable to overwhelm Asian demand

There will be a point in the near future when Asian demand will swamp developed world selling and take complete control of the gold market, says Julian Phillips.

Julian Phillips&nbsp|&nbsp4 October 2013&nbsp13:52

Gold Today –New York closed at $1,317.40 barely changed on yesterday. Asia took $2 higher right to London’s opening. At the Fix, gold was set at market prices at $1,316 up $15.25. In the euro it Fixed at €967.007 up another €5.6 with the dollar a tad stronger at $1.3596. Ahead of New York’s opening gold was trading at $1,309.00 and in the euro at €967.86.

Silver Today – Silver closed at $21.70 the same as yesterday. Ahead of New York’s opening it traded at $21.65.

Gold (very short-term)

The gold price should again consolidate above $1,300 with a weaker bias, today in New York.

Silver (very short-term)

The silver price should again consolidate with a weaker bias, today in New York.

Price Drivers

Gold & Silver – If we are to believe what the press and politicians tell us, the Republican leaders have signalled that they ‘will not allow a default’ on U.S. debt. If this is true then the next few days will be full of sound and fury signifying nothing. We have to temper this against the demands of Republican constituents and the right wing of its own party. What we can say for sure is that nothing is for sure!

So what impact is it having on gold? In the U.S. as you can see below it is precipitating sales from U.S. gold ETFs, which should have knocked the gold price down. But they haven’t.

Instead, reviving Indian demand for gold alongside the continuing robust Chinese demand is swallowing such offerings easily. Investors should take note of this as it has a significant bearing on the future of gold. As we have repeated often, U.S. gold sales are unable to overwhelm Asian demand. In 2013 U.S. institutions have been selling gold and did succeed in knocking the price down initially $500 and after a price recovery $300. We believe that we are close to the time when this selling ceases, but more importantly we now see that present U.S. selling is failing to dampen the gold price for long. It is a turning of the tide, which makes the present consolidations of gold and silver so important.

There is a point in the near future when Asian demand swamps developed world selling and takes complete control of the gold market. It is simply a matter of time in the near future.

Sales of 1.802 tonnes of gold came from the SPDR gold ETF. But once again, this appears to have been met by more physical demand than that, from Asia as the price held higher levels just below overhead resistance at $1,330. The total of the SPDR gold ETF holdings stands at 899.985 tonnes and the holding of the Gold Trust dropped by 0.795 tonnes leaving its holdings at 176.83 tonnes.

Silver – The silver price is again ‘marking time’ waiting for gold to give direction.